For some observers, the collapse of QInvest’s bid for Egyptian investment bank EFG Hermes indicates the difficulty of completing any M&A deals in post-revolutionary Egypt.

On May 1 the Qatari firm abandoned a plan to invest $250 million for a 60% stake in the bank, after the Egyptian Financial Supervisory Authority (Efsa) failed to approve the deal. Regulators in the UAE, Qatar, Saudi Arabia and Jordan had all agreed to the transaction.

But in the year after the EFG Hermes deal was first announced in late March 2012, other M&A transactions moved ahead. According to Dealogic, the volume of M&A transactions in Egypt either pending or completed between April 1 2012 and March 31 2013 were, at $8.2 billion, almost double those in the previous 12 months. The number of such deals jumped around 50% to 105.

Gulf buyers

In the biggest such deal, in late March, Qatar National Bank (QNB) completed its $2.7 billion buyout of NSGB, previously part of France’s Société Générale. Morgan Stanley and local player HC Securities & Investments advised on the sell side. JPMorgan advised QNB.

Another deal involving a French bank – the $500 million purchase of BNP Paribas’ Egyptian commercial bank by Dubai’s biggest bank, Emirates NBD – is also expected to close this month (Perella Weinberg and HC advised Emirates NBD).

Sources in the region’s financial community say these transactions demonstrate deals can be negotiated, as the Muslim Brotherhood under president Mohamed Morsi has consolidated its control, although political considerations clearly have to be astutely weighed in.

Angus Blair, president of Cairo-based research firm Signet Institute, says: "It is absolutely clear the regulators didn’t want to make a decision [on EFG Hermes] without the prime minister or the president intervening and saying what should happen." Other observers say it might have been too early for the bid, because of EFG Hermes’ alleged past activities and connections, under the former regime.

Gamal Mubarak, son of former president Hosni Mubarak, has a 17.5% stake in EFG Hermes’ private equity business. Furthermore, Gamal Mubarak and EFG Hermes’ former co-CEOs, Hassan Heikal and Yasser El Mallawany, are fighting allegations – which they deny – of insider dealing in 2007 worth $400 million in the shares of Al Watany Bank (now owned by National Bank of Kuwait).

Efsa’s official reason for not approving the QInvest deal was that the company taking over the assets, EFG Hermes Qatar, was not sufficiently experienced. But informally, doubts had also been raised as to the deal, almost as soon as it was announced, partly because it would mean an important Egyptian-owned asset falling into foreign hands (not the case with recent commercial bank acquisitions, as these were already foreign-owned).

Despite mixed reaction to the state’s handling of the EFG Hermes deal, international interest in Egypt, the Arab world’s most populous nation, appears to persist. QNB’s purchase follows the Qatari state’s provision of support to Egypt’s sovereign finances. The Qataris have also been getting involved in other sectors in Egypt, such as energy.

Amsterdam move

The BNP Paribas deal shows Gulf interest is not just from Qatar. And there is interest from outside the Middle East. Among other Egyptian transactions still pending as Euromoney went to press were deals, for example, between various US companies and Orascom Construction Industries (OCI), and between Orascom Telecom and Altimo Holdings, run by Russian oligarch Mikhail Fridman.

Altimo’s bid was approved by Efsa on April 15. On May 14 Orascom Telecom urged shareholders to reject the $1.8 billion offer, saying it undervalued the company. A spokesman for Orascom Telecom told Euromoney in mid-May that fewer than 1% of shares had been sold to Altimo. The tender offer was due to expire on May 27.

Yet OCI appears to be pressing on with moving its stock market listing from Cairo to Amsterdam, with advice from Barclays, Citi, Rabobank, and local firm CI Capital.

The OCI deal – if motivated by a desire to disassociate the company from an Egypt still in flux – is supported by a $1 billion investment from Bill Gates’s Cascade Investments, and US-based Southeastern Asset Management and Davis Selected Advisers. The Sawiris family (which founded Orascom) and Dubai private equity group Abraaj Capital will also participate in the tender.

The shares have been trading below the original offer price since a tax dispute emerged earlier this year over the sale of a cement business in 2007. But that dispute, at least, was resolved when OCI agreed in April to pay close to E£7 billion ($1 billion) in settlement.

With travel bans on OCI chief Nassef Sawiris and his father Onsi lifted after the agreement on the tax dispute, it is perhaps another sign that deals can be done in Egypt – as long as Morsi’s government gives its go-ahead.